US Equities Leak As Retail Sales Disappoint; CORN Pops

[Chart courtesy of MarketWatch.com]

US equities finished lower Monday as retail sales dropped unexpectedly for the third straight month, even though economists had forecasted a slight increase, raising concerns about the economic recovery that ultimately pushed down two of the three indexes for the seventh session in last eight.

US Treasury five-year yields fell to a record low of 0.60 percent earlier as investors sought refuge in government securities. Yields may, however, fight back if and that’s a big “if” Federal Reserve Chairman Ben Bernanke calls for more stimulus when he climbs the Capitol Hill tomorrow for his half-yearly testimony before the Senate Banking Committee.

Personally, I don’t believe any stimulus candy will be dished out at this point. Any QE left in the Fed’s arsenal may prove to be of questionable long-term value and will probably be saved for a rainy day when economic data worsens and/or the markets tank big time.

The Dow Jones Industrial Average (DJIA) shed 49.88 points with 23 components of the 30-stock index closing lower. The S&P 500 Index (SPX) lost 3.14 points with industrials and consumer discretionary faring the worst and energy gaining the most among its 10 business sectors.

Dropping earlier to 1.4403 and flirting with the record low of 1.4387 set on June 1, the 10-year benchmark Treasury yield dropped two basis points to close at 1.47 percent in late afternoon trading. 30-year bond yield declined two basis points to 2.55 percent after dropping to as low as 2.52 percent.

ETFs in the news: 

Commodities, except natural gas, continued to strengthen on Monday with grains posting solid gains for the day. Both wheat and corn surged, gaining more than four percent as drought in the Midwest continued to spook markets. The Teucrium Corn Fund (CORN) was one of the biggest percentage gainers, adding 3.79 percent on the day.

Other grains related funds such as the iPath Exchange Traded Notes Dow Jones – AIG Grains Total Return Sub-Index ETN Series-A (JJG) and ELEMENTS Exchange Traded Notes MLCX Grains Index-Total Return (GRU) also emerged solid gainers, adding more than four percent each. JJG has added more than 37 percent in the past month alone.

The Invesco PowerShares DB Commodity Index Tracking Fund (DBC) which follows 14 of the most heavily traded physical commodities, also finished 1.24 percent higher as wheat, corn, gasoline, crude and Brent crude traded upwards.

In the losers department, the United States Natural Gas Fund (UNG) tumbled today, shedding 2.45 percent ahead of the weekly storage report by EIA on Thursday. Analysts anticipate a glut in natural gas supply this week, putting pricing pressures on NG-linked products.

There were no newsworthy changes to our Trend Tracking Indexes.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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